Gold prices declined on Monday, poised to settle at their lowest in more than a month after falling for a second straight week, as expectations that the Federal Reserve might push interest rates even higher have weighed on the yellow metal while boosting Treasury yields and the U.S. dollar.
Price action
- Gold for April delivery GC00, -0.37% GCJ23, -0.37% fell $7.50, or 0.4%, to $1,867 per ounce on Comex. Prices for the most-active contract haven’t settle at a level this low since Jan. 5, FactSet data show.
- Silver prices for March delivery SI00, -0.52% SIH23, -0.52% fell 6 cents, or 0.3%, at $22.015 per ounce.
- Palladium for March PAH23, -0.39% gained $6.10, or 0.4%, to $1,531 per ounce, while platinum for April PLJ23, +0.01% traded at $949.40 per ounce, down $2.40, or 0.3%.
- Copper prices for March HGH23, +0.91% gained 4 cents, or 1%, to $4.057 per pound.
Market drivers
Gold prices had climbed for three straight months through the end of January, gaining more than 17%, according to FactSet data.
But the rally, which also benefited prices of other precious metals like silver, came to a halt earlier this month as robust January economic data, including the Labor Department’s monthly report on the U.S. jobs market and the ISM survey on services-sector activity, spurred a recalibration of interest-rate expectations.
“The concern for gold throughout January was that it was trading on sentiment rather than reality and, while the indicators throughout last month matched up with this forward-looking view, it would only take one or two data points out of line with the prevailing view for the precious metal to suffer a price shock,” said Rupert Rowling, a market analyst at Kinesis Money.
That’s “exactly what has happened with a hotter-than-expected U.S. jobs print, forcing a recalibration of how soon the Fed will stop its aggressive stance,” he said in a daily note.
Investors are coming around to the notion that the Federal Reserve will push rates north of 5% in the coming months, then keep them elevated until at least 2024. Some are betting that rates could move even higher, perhaps to 6% or beyond.
Fed policy makers, including Chairman Jerome Powell, have contributed to these expectations by insisting that rates still have further to rise, and that the central bank still has a way to go in its battle against inflation.
Traders hoping for gold to once again break the $1,900 per ounce level are hoping that Tuesday’s U.S. inflation report will once again show price pressures waning more quickly than economists had expected.
“For now, gold investors will be hoping that this week’s U.S. inflation data positively surprises to once again give the U.S. central bank room to hit pause on more hikes,” said Rowling.
This article was originally published by Marketwatch.com. Read the original article here.
